#3: Reality mining

Negative capability, seeing what's actually there, and situationally appropriate innovation.

I’m Vaughn Tan—my research focuses on understanding individual and collective responses to uncertainty and I teach strategy and design at University College London’s School of Management. The Uncertainty Mindset is a weekly newsletter in which I noodle on unknown futures and how they affect thinking and acting. Ideas are likely to be half-baked.

Last weekend I went to Oxford to see to some friends whose bakery is designed around a specific idea of success, and to talk to someone about grain. (Look forward to future issues of this newsletter on how strategic uncertainty affects mission-driven businesses and how wheat can be responsive to environmental uncertainty.)

Saturday night found some of us in the Punter, a Thames-side pub convenient to the Oxford train station and distinguished by unusually good fenestration. Conversation turned to Negative Capability, which John Keats defined as “when a man is capable of being in uncertainties, mysteries, doubts, without any irritable reaching after fact and reason”—it is the ability to not know without being paralyzed by not knowing.

Because creative work is often minimally structured (and thus full of not-knowing), negative capability is most often talked about and valued in that context: Keats identified it as a quality found in a “Man of Achievement, especially in Literature, and which Shakespeare possessed so enormously.” (Both quotes are from a letter from Keats to his brothers in December 1817.)

But it’s valuable more generally than that.

The most obvious use-case is in situations where not-knowing cannot be avoided. Imagine that you’re a diamond-seeking miner in a deep tunnel, without the benefit of modern sensing technology that reveals the specific detail of the geology ahead of you. As your pick-ax chips away at the stone, it uncovers this specific detail: a kimberlite pipe, or a zone of clay, or whatever. Your progress as you tunnel is analogous to the future unfolding. As time progresses, your action (tunneling) reveals new information which was unavailable before (you discover what you’re tunneling through) and reduces uncertainty. This soldier-on form of negative capability is required to continue to act (by tunneling on) even if it isn’t clear what lies ahead (perhaps diamonds, perhaps a pocket of highly flammable methane).

What I want to focus on instead is a different type of not-knowing. It’s not about the future (or, to be more precise, about temporal information asymmetry). Instead, it’s about seeing what is already there.

Back in the mine, instead of tunneling on, you set down your pick-ax and cast your eyes about. The beam of light from your headlamp illuminates the rough-hewn walls of the tunnel around you. Instead of looking to the territory ahead, you consider what is here and now. While eating your approved mining snack (maybe a PGI Cornish Pasty), you engage in an exercise to induce beginner mind. Your previously diamond-focused mind gradually, then suddenly drops its preconceptions of value—and becomes able to perceive other things and make sense of them as being valuable too. In that moment, you see that the reddish lumps studding the walls of the tunnel are rubies. (Admittedly, this is geologically unlikely).

The ability to temporarily or continually suspend focus on a singular idea or system for thinking about value is another form of negative capability. To allow multiple possibilities for what is valuable to simultaneously exist requires choosing to not know what is valuable. This form of negative capability is about being able to drop preconceptions and thus to more comprehensively understand what resources and constraints are currently available. This allows other possibilities inherent in the moment to be perceived and acted upon.

To be clear: where soldier-on negative capability enables action in the face of externally imposed uncertainty, beginner-mind negative capability enables internal maintenance of uncertainty. The former is useful as the world becomes more unavoidably uncertain. For instance, right now, not knowing what the hell is going to happen with Brexit is unavoidable; negative capability would allow goal-oriented action without paralysis—and an uninformed observer might conclude that there appears to be a negative capability gap in UK politics.

The latter, the beginner-mind form, can be the foundation of sophisticated and elegant action—and not only in artistic or creative work. Negative capability is visible in every instance of situationally appropriate innovation I can think of. Having the ability to see the trimmings from preparing meat not as waste but as potential ingredient (“It would be disingenuous to the animal not to make the most of the whole beast; there is a set of delights, textural and flavoursome, which lie beyond the fillet”) eventually influenced the trajectory of a city’s restaurant culture. Being able to see low-grade wood fuel not as a constraint to be eliminated but one to be incorporated in the design of cookstoves changed the economic outcomes and respiratory health of millions of people and contributed to slowing the rate of anthropogenic climate change. Seeing that existing human biomechanics are a resource to be enhanced instead of a constraint to be mitigated was the basis for a successful product company.

Innovation (which is distinguished from creativity by the requirement of usefulness combined with novelty) is almost entirely about creating new ways to understand what value is. The beginner-mind form of negative capability is useful for creativity, as Keats noted, but is essential for pragmatic imagination which results in grounded and situationally appropriate innovation. It allows more complete perception—and thus fuller use—of the situation. This means not only being able to use resources that others would not see, but also to accommodate constraints in ways that others would not be able to conceive of. Negative capability of this second type is an essential resource for effective reality mining: achieving desired outcomes through sophisticated actions that suit the fine detail of situations as they currently are.

Both forms of negative capability (soldier-on and beginner-mind) are rare and valuable in an increasingly uncertain world where innovation is prized. They also seem to be internally generated abilities that can be enhanced and strengthened by frequent exposure to situations of future uncertainty or value uncertainty. You might imagine that people and institutions are investing in increasing their negative capability … but this appears to be the exception not the rule.

If negative capability is trainable, it can also be lost by lack of use or through active suppression. I’ve taught since 2005, becoming a so-called “teaching professional” in 2013. In both undergraduate and doctoral students, I’ve noticed that modern higher education in general (but especially here in the UK) appears to increasingly retard negative capability by emphasizing measurable performance and encouraging specialization. The most disturbing thing is a strong sociocultural and institutional pressure on students to foreclose on possibilities very early. Instead of designing education to train students to be better reality miners, we seem to be doing our best to shape them into maladapted automatons.


Not unrelated miscellany

  • Burkhard Bilger writes about tunneling machines in the New Yorker.

  • William Empson’s Seven Types of Ambiguity (original pub. date 1930) explores multiple ways in which text can be intentionally ambiguous. For Empson, ambiguity is when “alternative views might be taken without sheer misreading.” My take is that the authorial decision to be intentionally ambiguous represents an attempt to design a system (in this case a text) for negative capability.

  • Marshall McLuhan distinguishes between hot media (which engage fewer senses more totally) and cool media (which engage more senses less completely)—users are forced to interact more deeply with cool media content because it has gaps that require active meaning-making. For more on this, see Understanding Media (original pub. date 1964). Chilling down media aggressively may be a path forward in negative capability training.

  • The hunger for security and certainty (which is the obverse of negative capability) may be the root of distress in a world of increasingly unavoidable external uncertainty—acknowledging and dwelling in internally induced uncertainty reduces the distress arising from futile attempts to control the uncontrollable. Alan Watts explains this better than I can in The Wisdom of Insecurity (original pub. date 1951).

  • The ability to see comprehensively (or less filtered-ly) is also a quality of good investigators and scientists of both social and physical phenomena. In “Corsons Inlet,” A.R. Ammons shows how negative capability brings with it serenity and the ability to see better: “no arranged terror: no forcing of image, plan,/ or thought:/ no propaganda, no humbling of reality to precept:/ terror pervades but is not arranged, all possibilities/ of escape open: no route shut, except in/ the sudden loss of all routes:/ I see narrow orders, limited tightness, but will/ not run to that easy victory:/ still around the looser, wider forces work:/ I will try/ to fasten into order enlarging grasps of disorder, widening/ scope, but enjoying the freedom that/ Scope eludes my grasp, that there is no finality of vision,/ that I have perceived nothing completely,/ that tomorrow a new walk is a new walk” (the whole poem, which is not long, is very worthwhile). (To say nothing about how a tabula rasa is believed to be the ideal beginning state for those undertaking Old Skool Ethnography.)

  • Negative capability is important for organizations too, though it takes a different form in that context. In The Sense of Dissonance, David Stark and his co-authors write about how heterarchies—organizations in which multiple systems of value are simultaneously valid—are uncertain at any given time about where value lies. This creates internal friction and negotiation which (counter-intuitively) increases the likelihood that they can adapt and innovate in response to environmental change.

  • Years ago, a friend at work gave me a copy of Herminia Ibarra’s Working Identity; reading it precipitated a major change in personal direction. The greatest impact was from the narrative cases of individuals who had worked for years to become people they eventually realized they didn’t want to be. My takeaway: early specialization combined with path dependence and growing external uncertainty produces deeply unhappy people. (It’s possible that I’ve gone too far to the other extreme.)

  • Yes, I know about the other definition of reality mining—not unrelated, but also not the same thing.

Uncertainty and complexity?

Venkat emailed in response to issue #1 to comment that,

Your 3 complications of basic world 2 seem like: emergent effects, sensitive-dependence effects, and agency effects. Is that a reasonable gloss? If so, all 3 are aspects of complex systems and you're saying a strict risk mindset is a poor way to understand complexity. But I’m not sure the distinction is that sharp. A deductive knowledge of probability is simply unmodeled and ignored natural emergent interactions + sensitive dependence. A die roll is unpredictable because of type 2 effects: insufficiently precise knowledge of initial angular momentum, elasticity, and surface geometry of the due/surface. Observed inductive priors might have a source in all 3. The weather affecting crops is emergent interaction + sensitive dependence uncertainty. The real distinction might not be source of unknownness but the extent to which well-behaved statistical models describe them, respecting central limit theorem etc.

My half-baked reaction is that unknown-ness is about—but not only about—complexity. Certainly, some of it is a result of unpredictable interactions that result in emergent order, path-dependence, or asymmetric information (which is more likely in a complex system)—these varieties of the unknown are externally imposed and often constrain action. Other than temporally asymmetric information, presumably any uncertainty originating in emergence or path-dependence can be resolved with sufficiently sophisticated modeling. But there are more interesting varieties of the unknown. The beginner-mind form of negative capability suggests that these are likely to be internally induced—and that they can be generative instead of constraining:

One tires of living in the country, one moves to the city; one is tired of one's native land, one travels abroad; one is europamüde, one goes to America, and so on; finally one dreams of traveling endlessly from star to star. Or the movement is different but the same. One tires of porcelain dishes, one dines off silver; one tires of that, one dines off gold; one burns half of Rome to get an idea of the conflagration at Troy. This method defeats itself: it is the bad infinite. What did Nero achieve? Antonine was wiser; he says, “It is in your power to review your life, to look at things you saw before, from another point of view.”

The method I propose consists not in changing the soil but, as in the real rotation of crops, in changing the method of cultivation and type of grain. Here, immediately, we have the principle of limitation, which is the only saving one in the world. The more you limit yourself, the more resourceful you become. A prisoner in solitary confinement for life is most resourceful, a spider can cause him much amusement. (That’s from Søren Kierkegaard’s Either/Or.)

I’ll be exploring the possibilities of self-induced uncertainty in much more detail—email me if you want to think about it together.

On loop

Last February, when I escaped the British winter (irresolutely chilly, damp, overcast, lots of root vegetables) to apply my shoulder to the writing wheel in Venice, California (dry, sunny, warm in the day, great citrus), I found what looked like a bootleg compact disc in the apartment I rented.

It turned out to be a self-manufactured album from a mysterious band called Sundown Songs. (I can barely find anything about Sundown Songs online. They seem to have vanished.) The title was Like a Jazz Band in Nashville—very modern lyrics embedded in music that ranges in style and delivery across old American folk, from Emmylou Harris, to Woody Guthrie, to Hank Williams Sr., to Barbara Dane. I especially enjoy “East to Maine.”

If you liked this issue, you could click on the little ❤️️ and share it with people who might like it too. Please send comments, suggestions, and satisfying dog videos to <uncertaintymindset@vaughntan.org>. You can also get in touch on Twitter @vaughn_tan and Instagram @vaughn.tan.

#2: Degrees of freedom

Buffering uncertainty; the workmanship of risk; disaster and responsiveness

I’m Vaughn TanThe Uncertainty Mindset is a weekly newsletter in which I noodle on unknown futures and how they affect thinking and acting. Ideas are likely to be half-baked.

A restaurant kitchen is a factory. During service, orders stream in from the dining room. A table of four orders, say, fourteen different dishes between snacks, first courses, mains, and desserts. Their dishes are split up and sent to kitchen’s various stations—salad, fish/meat, pastry, that kind of thing—each preparing a different set of dishes according to the equipment installed. Every station focuses on its own stream of orders. Each dish must be made and timed correctly so that the different dishes ordered can be recombined to go back out into the dining room and land on the table at the same time.

If only it were as simple as it sounds.

All cooking is unpredictable to some degree. Unpredictability results from accidents and malfunctions. Discovering during service that someone has accidentally thrown out the spare tray of prepared garnishes, or that the steam oven no longer steams, or that the dishwasher waste pipe is clogged. Unpredictability is also guests and their peccadilloes. The guest does not eat anchovies (or raw things, or things that grow underground, or nightshades, or anything that once had eyes). Or an entire table’s order has to be held at the pass because the guest must get up to make a phone call that Simply Cannot Wait. The more complex the food is and the more carefully polished the service intends to be, the more unpredictable cooking becomes.

With training and advance planning, a good kitchen team can absorb and buffer much unpredictability. A guest stands up just as the dishes for her table have been plated? What a delight it will be to re-fire all those dishes anew when she returns from her 10-minute phone call. Can’t find the spare prep? It’s a snap to brunoise carrots while keeping an eye on 54 tickets open tickets. No anchovies? It’s our pleasure to make a totally different dressing for this salad in between all the other stuff we have to do.

If the kitchen is working well—if the people in it are individually and collectively in the zone—the guest’s experience can feel almost magically untouched even through considerable disruption. If. Matt Orlando, who owns Amass Restaurant in Copenhagen, once told me, “there’s nothing better than when the kitchen is in the zone. The freestyling feeling is amazing—but it also means everything is this close to going completely to shit.”

Absorbing the impact of a thousand unanticipated events, big and small, is why every ambitious restaurant kitchen feels the same during service. Everything is happening a little too quickly, everyone is intensely focused on the work at hand. There is a palpable tension in the space. The kitchen constantly skates along the edge of disaster and, if it is lucky, avoids going over it.

Who doesn’t want to build an adaptable and responsive team that can absorb unpredictability and uncertainty?

One way to understand how to do this is by considering something which at first seems quite distant. David Pye, a furniture-maker and for a time professor of design at the Royal College of Art, introduces the concept of the workmanship of risk in his book, The Nature and Art of Workmanship (back in print and well worth owning):

“If I must ascribe a meaning to the word craftsmanship,” Pye says, “I shall say as a first approximation that it means simply workmanship using any kind of technique or apparatus, in which the quality of the result is not predetermined, but depends on the judgment, dexterity and care which the maker exercises as he works. The essential idea is that the quality of the result is continually at risk during the process of making; and so I shall call this kind of workmanship ‘The workmanship of risk’ ... With the workmanship of risk we may contrast the workmanship of certainty, always to be found in quantity production, and found in its pure state in full automation. In workmanship of this sort the quality of the result is exactly predetermined before a single salable thing is made” (p20 of the 2008 Herbert Press reprint edition).

Important: “risk” here doesn’t mean “an unknown future where potential outcomes and their probabilities are known.” For Pye, risk has a meaning closer to “susceptible to destruction and spoliation.” He illustrates with the contrasting examples of mechanized printing in which the layout of the page is determined before printing begins (certainty) and handwriting where the layout of the overall product depends on the attention taken as each character is written (risk).

Like ambitious restaurant cooking, sophisticated calligraphic work requires intense focus. The movement of the pen or brush is only minimally controlled by external agency. There is much scope for spontaneity and hence for error and accident. The brush, too heavily loaded as it travels from inkstone to paper, leaves a trail of ink where none had been planned for. One part of the sheet of handmade paper is slightly more absorbent, causing the ink to unexpectedly spread and cloud.

The sophisticated calligrapher plans in advance (as a football or basketball team drills for weeks) to be spontaneous and responsive in the moment to such an eventuality. The plan evolves in real-time, changing so the ink trail becomes an ornament, the cloud of ink a part of the overall design. Moment by moment during the work, the calligrapher changes the plan to accommodate the unplanned and the emergent.

In the workmanship of risk, you cannot simply set it and forget it.

“There is something about the workmanship of risk, or its results; or something associated with it; which has been long and widely valued … The workmanship of risk has no exclusive prerogative of quality. What it has exclusively is an immensely various range of qualities, without which at its command the art of design becomes arid and impoverished” (p20-23).

Pye could have gone much further in considering the source of value in the workmanship of risk. What produces real value in the workmanship of risk is freedom to act. To be executed well, the workmanship of risk requires the operator to be in the moment, because of the many degrees of freedom available (here, the phrase carries a different implication from its most common usage in statistics). By intention, the workmanship of certainty removes as much freedom in action as possible—the operator of the printing press can only minimally affect what gets printed. In contrast, again by design, the workmanship of risk does not aim to minimize freedom to act—the calligrapher may be able to decide everything about how the text on the page is laid out and each character produced.

The workmanship of risk has higher variance in outcomes because the operator has more freedom to act—and thus more ways for disaster to strike. The other side of the coin is where value arises: this includes the freedom to take unplanned actions in response to unanticipated problems and developments. Losing focus means potential disaster; staying focused creates the potential for responsiveness, and adaptability. The one cannot be separated from the other.

In highlighting the two-sided nature of freedom to act, the workmanship of risk becomes relevant to teams and organizations facing uncertainty.

When designing a team and the work it does, you have a choice in how much freedom you build in. It’s tempting to try and parameterize work as fully as possible—to eliminate as much uncertainty from discretion as you can, to minimize the ways in which the organization can mess up.

The amount of freedom designed into teams and the work they do is directly connected to how responsive and adaptable those teams can be. Designing organizations to incorporate a large number of degrees of freedom comes with a tradeoff which is essential to make but hard to accept: the potential for adaptability and responsiveness comes with the potential for unanticipated disaster. The flip side is that a highly constrained organization may work well when things go according to plan, but may crumble when things do not.

The essential insights here are:

  1. Responsiveness and adaptation to external uncertainty requires freedom to act.

  2. Freedom to act creates potential for internal uncertainty.

  3. An organization’s ability to respond to external uncertainty is created by embracing internal uncertainty.

Not unrelated miscellany

  • Here’s a video of the calligrapher Tan Swie Hian talking about making of one of his pieces, including a commentary on responding to the inevitability of error and accident.

  • The British Library’s permanent gallery of treasures holds many hand-written books in which evidence of calligraphic responsiveness can be seen. You can see parts of the collection online here.

  • When a problem to be solved is emergent and incompletely parameterized, having a reflective conversation with the situation may be helpful (from Donald Schön’s book, The Reflective Practitioner).

  • Being free to act can be a choice, and when people choose to be free to act, they respond differently to situations they face. James Krenov, who taught furniture-making at the College of the Redwoods, began from an unusual perspective on material: “… there are people for whom wood and working with wood is not simply a profession but a very intimate thing: the relationship between the person and the material, and how they are doing it. I mean how they are doing it in the most intimate detailed sense; the relationship between wood and the tools that they use, between their feelings, their intuitions, and their dreams. Wood, considered that way, is to me alive” (from A Cabinetmaker’s Notebook). This broader perspective on wood influenced his approach to furniture design and making, which is planned but nonetheless responsive to emerging discovery of material affordance.

  • German has a specific word for ultra-high-dimensional awareness and situational responsiveness: Fingerspitzengefühl.

  • Michel de Certeau writes that acting tactically means always being “on the watch for opportunities that must be seized ‘on the wing’, [and being able to] constantly manipulate events in order to turn them into ‘opportunities’ ... the intellectual synthesis of these given elements takes the form, however, not of a discourse, but of the decision itself, the act and manner in which the opportunity is ‘seized’” (The Practice of Everyday Life, xix). The ideal is to be able to combine tactics (action in response to the situation as it presents itself in the moment) with strategy (advance planning). Organizations (and people) designed around extensive freedom to act have the potential to fuse strategy with tactics—the ideal union for responding to uncertain environments.

Currently on loop

If you liked this issue, you could click on the little ❤️ and/or share it with people who might like it too. Please send comments, suggestions, and satisfying dog videos to <uncertaintymindset@vaughntan.org>. You can also get in touch on Twitter @vaughn_tan and Instagram @vaughn.tan.

#1: Varieties of the unknown

I’m Vaughn Tan, and The Uncertainty Mindset is a weekly newsletter in which I noodle on unknown futures and how they affect thinking and acting. Ideas are likely to be half-baked.

I left Google in May 2008 to work (briefly, it turned out) in the woodshop at Anderson Ranch, in the mountains at the top of the Roaring Fork valley in Colorado. Shop life was totalizing—most days, we were up at 6.30am and fell into bed after 1am. Internet access in the mountains was patchy and unreliable. I didn’t have a chance to pay close attention as first the US, then the global, financial system went to the edge of collapse. But as the summer progressed, the scale of the unfolding and the few Google shares I had left meant that I wanted to keep up with what the markets were doing. So I took my phone out with me whenever I knew I would be close to a strong enough cellular data signal.

This was usually after we closed the shop. On my way home around midnight after locking up, I’d lean the bicycle against a big oak next to the path and walk up to the flat rock on the little hill between the ranch and the apartment where, on a clear night, the Internet would trickle across the mountains from the neighboring town of Aspen.

At the time, it was hard to interpret what was happening. My (and nearly everyone else’s) existing sensemaking systems were essentially useless. The scale of the businesses that were crumbling—multi-billion-dollar banks that the previous year had been in great shape—was nearly impossible to comprehend. So was the speed and unpredictability with which confidence in the financial system disappeared. Through all this, mostly on a little cellphone screen, I read about the exotic financial instruments that had precipitated this meltdown—and about how even the people who had invented them were only now beginning to understand how they actually worked.

2008’s events can be interpreted as an illustration of a fundamental problem with how we think about action and causation. We routinely mistake true uncertainty for risk. To understand why these are so often mixed up requires starting from a situation of certainty—of complete known-ness. I have a book coming out soon from which I’ve borrowed the examples that follow.

World 1: Suspend disbelief and imagine that you are a US-based manufacturer of a carbonated drink. You are sure that demand for your product will grow steadily at 4% a year. You own your manufacturing and distribution facilities, have long-term price contracts for all the materials you use to make your products, and have no desire to introduce new products. Current regulations also mean that you can be sure no competitors will enter the market. In this world, your business decisions—such as how much and when to invest in equipment, when to hire production staff and how many of them to hire—are straightforward and easy to analyze and plan for.

In World 1, you are completely certain about the future world-state. Your expectations (4% annual growth, availability of production resources, demand, prices of ingredients, etc) are accurate because there are no alternative future world-states. Nothing about this world’s future is unknown, which makes it easy to choose how to act. Expecting such certainty in any even slightly complex situation is absurd. In nearly every real-world instance, the future is actually unknown:

World 2: The world of complete certainty described above remains except for one detail. There is now a chance that bad weather affects harvests in the countries where your sugar producers are located. If this happens, even with long-term price contracts, there is a chance that some of your sugar suppliers will be unable to deliver as much sugar as you will need. Specifically, your infallible analysts have put the chance of a 1000-ton sugar shortfall at 20% within the next two years. Your production will be affected by such a shortage, reducing profit in that period by $2 million. Given current sugar prices of $220/ton, you protect yourself by buying 1000 extra tons of sugar for $220,000 and renting additional warehouse space to store it for two years at $24,000. The risk here is the 20% chance of losing $2 million in profit in the next two years (i.e., $400,000), which exceeds the cost of buying and storing the emergency sugar stockpile ($244,000). Deciding to stockpile some sugar is clearly sensible.

World 2 is more “realistic.” There are two possible future world-states—one where sugar supply is interrupted (20% chance in the next two years), the other where it is not (80% chance in two years). This kind of probabilistic knowledge allows formal rationality, where actions can be impersonally and quantitatively calculated. This is why there is a clearly sensible risk-mitigating action (to stockpile sugar as long as the cost of doing so is lower than the potential profit loss from bad weather). Approaching the world as if it is unknown in a way that permits this kind of calculative mitigating action is to have a risk mindset.

A more precise way to put it is: a risk mindset is one which assumes that future world-states and their respective probabilities are known.

Frank Knight explained (back in 1921) that knowledge of probability can be a matter of general principle, statistical observation, or estimation. Probability from general principles is deductive, such as the probability of any given outcome from throwing a fair, six-sided die (this is also called a priori probability). Probability inferred from statistical observation is not deductive. An example is inferring the probability of future defects by observing the historical average defect rate on a production line—even if past performance is not indicative of future results. And estimations of probability are purely a matter of subjective judgment. This can be (and often is) nearly free of supporting information, as Ellsberg’s paradox illustrates.

A priori probabilities are the only form of probabilistic unknown-ness that seem to truly be compatible with the requirements for formal rationality. Neither statistical nor estimated probability are actually compatible with a risk mindset—but they’re often treated as legitimate foundations for formal-rational decision-making anyway, the same way a priori probabilities would be. The reality is that scenarios in which decisions can be made purely based on a priori probabilities are vanishingly rare. In other words, World 2 is not very realistic at all.

But risk mindsets seem to be the default now. Maybe it is because an unknown future is less discomforting when accompanied by a belief that the unknown-ness can be mitigated or planned away. And maybe because of more deeply seated cognitive biases such as the ones Tversky and Kahneman became famous for.

Whether or not we want to admit it to ourselves, risk—World 2 unknown-ness—is not the only type of unknown-ness there is, and most of what we label risk is actually something else entirely. For now, I can offer three scenarios that each illustrate a distinct non-risk form of unknown-ness.

1: Unknown-ness from emergent interactions of calculable unknowns. Through the late 1990s and early 2000s, banks created a slew of products which took the form of complex financial instruments that redistributed risk—among the most important ones were mortgage-backed securities and collateralized debt obligations, which were (and remain) complex and difficult to understand. As individual products in isolation, their behavior may have been comprehensible and predictable. But they were not isolated products—instead, they interacted with each other and with the rest of the global financial system. These interactions were often unpredictable, and created unpredictable knock-on effects which rippled through the system.

Though the products themselves were meant to spread calculable unknown-ness (risk) around, their complexity, profusion, and interactions created two different, but related, forms of unknown-ness: 1) not knowing how, and with what consequences, these risk-redistributing products interacted, and 2) not knowing where risk actually lay, who was exposed to it, and how much. This destroyed some banks which realized too late that their risk exposure was greater than they had prepared for (Bear Stearns and Lehman Brothers).

As confidence and liquidity within the financial system evaporated in 2008, stabilizing actions by policymakers failed to have their anticipated effects because of the unpredictable interactions of the component parts of the global financial system. Surgically precise interventions became impossible. The result has been a decade of extreme money supply expansion in nearly every major economy, with corresponding distortion of asset prices and foreign exchange rates.

2: Unknown-ness from insufficiently precise knowledge about calculable unknowns. In 2016, the UK held a referendum to decide whether or not to remain part of the EU. Before the referendum, what eventually turned out to be the most accurate polls and analysis put the likelihood of a vote to leave the EU at between 49% and 51%, with a margin of error that included the crucial voting statistic of 50%. In the final count, 51.9% voted to leave—the expectation from polling and analysis was surprisingly accurate, but not sufficiently so. The Trump-Clinton election in the US was very similar in this respect.

It’s hard to conceptualize what it means to act in a formally rational way in such situations. Even when possible outcomes are binary (as was the case in the Brexit referendum and the 2016 US Presidential election), the implications and consequences of the two outcomes are so profusely complex and emergent that the actions driven by a risk mindset seem almost inevitably to fail when the probability of each outcome is insufficiently precisely known.

3: Unknown-ness from entirely unanticipated outcomes. Even 5 years ago, it would have been hard to convince most people that a social media platform might meaningfully influence an election outcome, let alone the idea that a foreign power might use a social media platform to do so. As subsequent events have showed, planning for the future in a formal-rational way is difficult if the range of possible futures includes entirely unanticipated ones.

Entirely unanticipated outcomes are more common than we let ourselves think. All innovations slightly deform the world—their function is to simultaneously invalidate part of how things currently work while creating new ways for things to work. In a world with innovation, entirely unanticipated outcomes are inevitable.

I’ve intentionally used the word “uncertainty” as little as possible because it’s too easy to slip into assuming that the opposite of certainty is uncertainty—and so to imagine that all situations that are not certain are equivalent. This is functionally equivalent to applying the risk mindset to all situations where the future is unknown, even if the future is unknown in different ways.

The big question of the moment is: What should we do when we’re exposed to other forms of unknown-ness? The three non-risk varieties of unknown-ness above are only the tip of the iceberg. It isn’t clear how we should act in these scenarios. But non-risk forms of unknown-ness will increasingly be the rule rather than the exception. Thinking about unknown-ness forces us to attend to the different varieties of unknown-ness that exist—and consider new ways to plan for and respond to them.

Send comments, suggestions, and satisfying dog videos to uncertaintymindset@vaughntan.org. I’m also on Twitter @vaughn_tan and Instagram @vaughn.tan.

The uncertainty mindset

An attempt to think clearly about uncertainty, its antecedents, and its consequences.

We’ve had the beginnings of a theory of true uncertainty since the early 20th century, but we continue to conflate risk and uncertainty in how we think about the future and how we act to make that future a reality. To take just one example, the global financial crisis of 2008 was precipitated by banks and investors who used a risk-management approach to act in a situation which was complex, interconnected, and thus truly uncertain. Uncertainty requires a fundamentally different approach to thinking about action than risk. But we appear to not be learning from the increasingly problematic consequences of this confusion—risk and uncertainty are still thought of as essentially interchangeable.

As the world becomes increasingly more complex and interconnected and thus more uncertain, we will need better and more systematic thinking about uncertainty. This newsletter is my attempt at doing that. Each week, I’ll explore aspects of what I call the uncertainty mindset—a mindset that acknowledges uncertainty and incorporates it in decisions about action.

The path forward forks in many places and vanishes into the mist, but here are some topics I’ll probably write on:

  • What is uncertainty?

  • Are there different types of uncertainty?

  • What causes uncertainty?

  • Do we make sense of uncertainty differently from risk?

  • In what domains of life does uncertainty intrude?

  • How does uncertainty affect choice and rational action?

  • Can uncertainty be beneficial?

  • What are good responses to uncertainty?

  • How can we design systems and organizations for uncertainty?

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